Endowment

A transfer or gift of assets to an institution, typically a charity, for a particular purpose For example, you can endow a scholarship at a college so that each year the earnings (or a unitrust payment, e.g. 5% of the principal) will be given as a scholarship to a qualifying student. The wonderful part of an endowment for your memory and the charity is that it can continue in perpetuity. An ideal way to benefit a charity you really care about is to endow your annual gift. So for example, if you gift $10,000 per year to a particular charity, you could buy a permanent life insurance policy for $200,000 so that following your death, 5% of $200,000 per year, or $10,000 will be continued in perpetuity as a gift in your memory to your favorite charity. An even better way is to endow a larger amount so that the $10,000 annual gift in perpetuity will be able to grow and keep pace with inflation. Thus, if you plan your endowment at a 3% or maybe 4% level, it will have a much greater likelihood of keeping its purchasing power intact.